As the curtain fell on the week, the Dow Jones Industrial Average took a modest bow, climbing 222.24 points to close at 34,061.32, a gain of 0.66%. The S&P 500, not to be outdone, soared 40.56 points, landing at 4,358.34, marking a 0.94% uptick.
The tech-heavy Nasdaq outpaced its peers, jumping 184.09 points to 13,478.28, a leap of 1.38%. Meanwhile, the VIX, Wall Street’s fear gauge, ticked up slightly by 0.46 points, or 3.09%, to 15.37, suggesting a whisper of caution remained in the air. Gold, that ancient bastion of value, dipped a slight 7.10 to 1,992.10, down 0.36%, while oil, the lifeblood of economies, flowed upwards by 1.01 to 81.52, a slick increase of 1.25%.
The S&P This past week was all about the central banks and their anticipated future interest rate moves. There was also a bit of dust-up in geopolitics due to the Israel-Hamas War, but it appears to be having less effect every day.
Tech Giants and Tumbles
Let’s zero in on Apple (AAPL). The tech behemoth didn’t quite hit the high notes investors were humming for, and its stock felt the blues, lounging around after the earnings report. But here’s the kicker: the broader market didn’t sob into its handkerchief. Nope, it rallied like a champ.
Now, let’s talk digits. The S&P 500, that grand old index, waltzed back above its 200-day moving average and its 50-day counterpart. We’re talking about a rebound from technical correction territory (that’s a 10% drop for the uninitiated) to a more respectable stance.
Interest Rates: The Slide and Dip
Interest rates took a slide down the hill this week. The 10-yr note yield said “see ya” to 31 basis points, landing at 4.51%, while the 2-yr note yield bid adieu to 17 basis points, settling at 4.86%. Why the retreat? A few reasons:
- The Bank of Japan’s policy tweaks were less hawkish than a dove in a peace parade.
- The Treasury’s borrowing estimate for Q4 got a haircut, from $852 billion down to $776 billion.
- Short sellers decided to pack it in, covering their positions like a camper in a rainstorm.
The Fed Holds Steady
The Fed, with Jerome Powell at the helm, kept the fed funds rate anchored at 5.25-5.50%. The market read between the lines of Powell’s presser and saw a potential pause in the rate hike saga. The Bank of England played a similar tune, holding its key rate but with a trio of dissenters itching for a hike.
The economic signals were flashing like a disco ball this week:
- The ISM Manufacturing Index contracted to 46.7%, a quicker pace than the expected 49.0%.
- Q3 unit labor costs took a surprising dip of 0.8%, thanks to a productivity spike of 4.7%.
- The October jobs report played a mellow tune with payroll growth at a slower beat, unemployment inching up to 3.9%, and wage growth cooling off.
The market’s crystal ball, the Fed funds futures market, is now betting against any more rate hikes for the next year and is even flirting with the idea of at least two rate cuts.
- Real estate was the star performer, jumping 8.6%.
- Financials cashed in a 7.4% gain.
- Consumer discretionary spent wisely for a 7.2% increase.
- Information technology coded a 6.8% uptick.
- Energy, the relative underdog, still pumped up 2.3%.
A Day-by-Day Play-by-Play
- Monday: The market shook off the cobwebs with indices climbing up to 1.6%.
- Tuesday: The S&P 500 played coy but ended up 0.7% higher, nearly winking at the 4,200 level.
- Wednesday: Post-FOMC, the market ended on a high, with indices up and spirits higher.
- Thursday: The S&P 500 got its groove back, closing above the 4,300 mark.
- Friday: Apple’s revenue outlook might’ve been a sour note, but the market still danced up, with the S&P 500 finishing above its 50-day moving average.
The Bottom Line
This week, the market found its sweet spot, buoyed by a mix of dovish Fed signals, positive earnings surprises, and economic data that was just right—not too hot, not too cold. It’s like the market found its rhythm, and investors are tapping their feet to the beat.
CALENDAR & MOVERS
- Wednesday: EIA Petroleum Status Report
- Thursday: Initial Jobless Claims
- Fed Talks
- Middle East Tensions
Upcoming Earnings Reports Offer More Insights
As the peak of earnings season concludes, investors still have the opportunity to glean important insights from various market segments with the upcoming earnings reports this week. Companies on the docket include Uber Technologies (UBER), UBS Group (UBS), Rivian Automotive (RIVN), eBay (EBAY), Warner Bros. Discovery (WBD), Ralph Lauren (RL), Disney (DIS), Take-Two Interactive (TTWO), MGM Resorts (MGM), and AMC Entertainment (AMC).
Market Momentum Regains Strength
The market has recently regained some of its earlier monthly losses, with the S&P 500 ending last week with a nearly 6% increase, accounting for almost half of its annual gains. This resurgence was propelled by a flurry of activity in both the commercial and financial sectors, with Tesla (TSLA) and Nvidia (NVDA) shares rising by 6% and 11%, respectively. Investors appeared to overlook last week’s key events, including the Federal Reserve’s decision to maintain interest rates and Apple’s (AAPL) lukewarm earnings amidst declining sales. Although this week’s schedule appears less packed, the ability of the market to sustain its upward trend remains a focal point for investors.
Federal Reserve in Focus
Attention turns to the Federal Reserve this week as it is set to release important consumer spending data and host speeches by prominent officials. The Federal Reserve Bank of New York will issue its quarterly household debt and credit report on Tuesday, shedding light on the financial well-being of American families in the third quarter. Later in the week, Fed Chairman Jerome Powell is expected to speak at the IMF’s annual research conference. Following the recent downturn in employment figures, investors should be vigilant for any indications from Powell about a potential easing in the labor market, which could mark an end to the Fed’s rate-hiking cycle.
A Broad Spectrum of Economic Indicators
In other news, the University of Michigan’s November Consumer Sentiment Index, an essential indicator of consumer attitudes toward personal finances and the economic landscape, is set to be released. Internationally, key figures like European Central Bank President Christine Lagarde, Bank of Japan Governor Kazuo Ueda, and Bank of England Governor Andrew Bailey are slated to speak publicly. Additionally, investors must stay alert to the evolving conflicts in the Middle East. The primary concern is the possibility of the conflict widening to include OPEC+ countries, such as Iran, and Western powers, particularly the U.S., which could lead to significant impacts and introduce substantial risks.
Oil & Energy
Amid economic uncertainties, tensions in the Middle East have taken a back seat, contributing to a dip in oil prices below the $90 threshold for both Brent ($87.30) and WTI ($83.90). A surge in U.S. weekly crude inventories further pressured prices downward. Notably, the International Energy Agency projected that global oil demand is expected to reach its zenith by 2030. Meanwhile, in Europe, natural gas prices found some equilibrium, hovering around EUR 50/MWh at the Rotterdam TTF.
Gold & Precious Metals
Copper prices remained steady over the week at the London market, an impressive feat considering the prevailing sentiment in financial markets. Encouraging data from China showed copper production hitting a new high in September, indicating sustained demand even amidst the real estate sector’s challenges. Copper is currently trading at approximately $7950 per tonne. Gold continues to trade at a robust $1980, capitalizing on its status as a refuge during market turbulence.
Fueled by anticipation of the potential debut of a Bitcoin Spot ETF in the US, bitcoin has experienced a 14% surge since Monday, approaching the $35,000 level at present. Following Bitcoin’s lead, ether has also made significant gains, rising over 7% in the same timeframe, and is now nearing the $1,800 threshold. The introduction of a bitcoin-backed exchange-traded fund would provide numerous investors with the opportunity to incorporate the digital currency into their conventional investment portfolios. However, it remains unclear whether there will be a massive influx of investors eager to acquire it. The outcome of this development will become clearer in the forthcoming weeks.